Abstract
The Conference recognizes the solemn obligation of the International Labour Organisation to further among the nations of the world programmes which will achieve…policies in regard to wages and earnings, hours and other conditions of work calculated to ensure a just share of the fruits of progress to all, and a minimum living wage to all employed and in need of such protection.
1
Although the above call for a minimum living wage was made more than 70 years ago, it has lost nothing of its relevance and urgency. It also illustrates that, historically, the two concepts of minimum and living wages have often been used synonymously. It is only more recently, under the hegemony of neoliberalism, that the two concepts have diverged. Minimum wages are increasingly understood as a basic wage floor, whereas living wages refer to pay that is above the subsistence level and enables workers and their families to sustain a decent living standard and to participate in social and cultural life.
The permanently high levels of in-work poverty and social inequality across the EU illustrate the need to reunite the two concepts and to turn minimum wages into living wages. As a matter of fact, it was the insufficiency of current minimum wage levels to prevent in-work poverty and social inequality that over the past two decades has led to the emergence of an increasing number of living wage movements, primarily in the Anglophone parts of the world. The dramatic economic and social consequences of the economic crisis in Europe and the crisis management pursued by European and national political actors provided an additional boost to the idea of living wages in other, non-Anglophone EU countries. Furthermore, after years of failed attempts to solve the crisis with supply side–oriented policies of austerity and internal devaluation European institutions and national governments have slowly realised that wages are more than just a cost factor. They increasingly emphasise the important role of higher wages in generating economic growth by boosting internal demand and in advancing social cohesion by ensuring that workers get their fair share of productivity increases. It is in this context that even European institutions and national governments have started to embrace the idea of a living wage as an objective to be pursued at national and European level.
In 2016, for instance, the French parliament presented a proposal for a European-level policy on minimum wages that included the provision that all national minimum wages should be at least above the poverty threshold. Similarly, at the beginning of 2019 the German government announced that the creation of a European legal framework for minimum wages would be one of the political priorities for the German EU Council Presidency in the second half of 2020. Another European-level example is the European Pillar of Social Rights endorsed by the European Commission and national governments in November 2017. In this document the European Commission for the first time refers to the concept of living wages (without mentioning the term of course) by acknowledging the right of workers ‘to fair wages that provide for a decent living standard’ and by ensuring ‘adequate minimum wages…in a way that provides for the satisfaction of the needs of the worker and his/her family’.
These initiatives to establish common European standards and objectives to ensure that workers can make a living from what they earn, go hand in hand with various national initiatives to increase national minimum wages to a living wage level. Despite the increased awareness at both national and European level of the significance of living wages, however, there is still no commonly shared and accepted definition of living wages. In many Continental European languages there is even no term adequately to express the function of living wages in going beyond ensuring a minimum wage floor.
Against this background, this special issue of Transfer has three principal objectives: (i) to provide a clearer idea of the concept of living wages and the issues involved in their operationalisation and implementation; (ii) to provide an overview of different national initiatives in EU Member States to establish living wages; and (iii) to draw lessons from different national experiences for a discussion of a European approach to the issue of living wages. While this special issue focuses strongly on developments in the United Kingdom as the country with the most mature living wage movement, the examples from other countries demonstrate the spread of living wage initiatives beyond the Anglophone world. In most cases, however, these initiatives were not explicitly couched in terms of a living wage campaign, even though they pursued the same objective by ensuring a minimum wage that enables a decent living standard. Thus, the key objective of this special issue is to illustrate the variety of country-specific practices in pursuing the establishment of a living wage and how these different practices can inform the development of a European approach to the issue.
Against this background, the special issue consists of three parts, which approach the issue of living wages from different angles. The first part comprises three articles setting the scene for the more in-depth country-specific contributions in parts two and three. The first contribution, by Schulten and Müller, introduces the concept of a living wage and provides an overview of the various initiatives in different European countries to ensure a living wage. The article illustrates that, despite their highly country-specific character, the various initiatives represent different ways of achieving the same objective, which provides important pointers for the European-level debate about the establishment of a European minimum wage. The second contribution, by Zimmer, analyses the normative legal foundations of living wages in international and European law and what this means for their implementation also with respect to the level of living wages. The third contribution, by D’Arcy and Finch, discusses different methods of calculating a living wage based on the experience in the United Kingdom where, in 2016, the different calculation methods for the London and the National Living Wage were reviewed with the aim of establishing an aligned method. Because the authors led this review, the article provides an insider’s account of the review process, focusing in particular on the characteristic elements of the living wage that were addressed in the review and the rationale behind the choices made in developing the aligned method. The article illustrates that there is no one best method. The choice of a specific method necessarily involves trade-offs and tensions across different elements between practicality and representativeness. The key to the success of any chosen method is to create a broad mutual understanding among the actors involved in determining the living wage.
The second part of this special issue consists of three articles providing in-depth accounts of very different, highly country-specific methods to ensure a living wage: a voluntary living wage in the United Kingdom, a living wage based on a statutory minimum wage in Slovenia and a living wage based on collective agreements in the Nordic countries. The first contribution, by Johnson, Koukiadaki and Grimshaw, analyses the development of the living wage in the United Kingdom since its introduction nearly 20 years ago. The article illustrates that the voluntary living wage in the United Kingdom proved to be an effective tool in reducing labour market inequality and in-work poverty at little or no cost to jobs or working hours. The article, however, also shows that the downside of the voluntary living wage in the United Kingdom is the comparatively limited coverage in terms of the proportion of low-wage workers covered. The article therefore concludes by exploring different mechanisms through which the scope of the living wage can be extended and embedded across low-wage labour markets.
The second contribution, by Poje, provides a chronological account of the Slovenian trade unions’ successful campaign to increase the national statutory minimum wage by 23 per cent in pursuing the objective of establishing a living wage. The example of Slovenia illustrates, first, that it is possible to increase the statutory minimum wage substantially without negative macroeconomic consequences in terms of unemployment and a loss of competitiveness; and second, that trade unions managed to adapt key elements of the living wage concept to an entirely different institutional context.
The third contribution, by Alsos, Nergaard and Van Den Heuvel, analyses the Nordic approach to a living wage based on a combination of centralised and well-coordinated collective bargaining and the pursuit of a solidaristic wage policy, which ensure high bargaining coverage and low levels of wage inequality, and a still comparatively generous welfare state. The article demonstrates that the Nordic way of ensuring living wages is linked to very specific conditions, such as high union density, employer federation support for sectoral wage-setting mechanisms and government policies in support of extensive welfare provisions. The article, however, also cautions against complacency by highlighting some potential threats to the three essential pillars of the Nordic model of collective bargaining and its capacity to ensure living wages through collective agreements.
The third part of this special issue contains four shorter contributions, which provide further country-specific examples of the different mechanisms for ensuring a living wage. The first contribution, by Sellers, of the TUC’s Rights, International, Social and Economic Department in the United Kingdom, provides an insider’s account of the role of British trade unions in the UK living wage movement, with a specific focus on how trade unions use the living wage in collective bargaining. The second piece, by Hofmann and Zuckerstätter (Arbeiterkammer Wien), analyses the Austrian view of living wages, in which minimum wages are established by collective agreements and where, in 2018, the Austrian Trade Union Federation, ÖGB, set a specific minimum wage target of €1700 per month for all industry-level collective agreements. The third contribution, by Flohimont, provides an insider’s account of the campaign by the Belgian trade union FGTB to raise the Belgian minimum wage from the current €9.65 to €14, which has been heavily influenced by the ‘Fight for 15’ movement in the United States. The fourth contribution, by Lain and Torrens, reviews the experience of the minimum living wage initiative at the local level in Barcelona where in autumn 2017 the city council decided to introduce a minimum wage of €1000.